Think it Through

Too often it seems there are two Barack Obamas steering economic policies.

First there is Obama the Reformer, who promised during the campaign that he would work toward more respect for the values of responsibility and fairness in the economy.

Then there is Obama the Wall Street Admirer, whose economic team has repeatedly acted like Hank Paulson’s interns, looking for Wall Street’s approval and pretending that it is not the administration’s role to stop policies that encourage the selfishness and irresponsibility that caused our economic downturn.

This identity crisis was in full force this past week on Capitol Hill, and it could turn into a political crisis for Democrats in 2010.

While some of the president’s lobbyists were talking to members of the House and Senate about tighter regulations on banks and other investment companies, the president’s chief of staff, Rahm Emanuel, was on Capitol Hill to press congress to exempt public companies from the current requirement that they use independent auditing to ensure they are complying with the law.  This requirement is part of the Sarbanes-Oxley legislation of 2002 that was enacted into law as a response to the growing financial fraud in the last decade.  Emanuel calls the exemption relief for small public companies, but Washington Post reporter Zachary Goldfarb pointed out that his exemption covered all firms handling under $75 million, about half of all public companies in existence.  This is change Wall Street can believe in.

At the same time that Democratic volunteers who believed in Obama’s new politics were going door to door in New Jersey and Virginia, the White House chief of staff was going office to office on Capitol Hill to convince congress to let public companies skirt the requirement that independent professionals check their books.  Emanuel succeeded but the volunteers in New Jersey and Virginia did not.  Does anyone see a connection?

Emanuel’s victory is the type of activity that not only hurts the economy but knocks the wind out of millions of Americans who hoped – even believed – that Obama would create real change.  It saps their faith in him and their confidence in our political institutions.

If the president expects those people who believed in his message of change to be energized in the next election, he needs to keep faith with them.  They are looking for only one Obama on the economy.